Emergency Budget | Money Management | Exodus Lending - Exodus Lending

Emergency Budget

By Kaitlyn Szabo June 19, 2020

Survival. Thatโ€™s the simple goal for anyone experiencing an emergency or personal crisis. Emergencies, including financial ones, push people into survival mode. But how can we survive emergencies when we are emotionally and financially strained?

One survival strategy is to implement an emergency budget (or a โ€œbare-bones budget”) that includes only essentials and cuts out all non-essential spending. The goal is to stretch your available funds as far as possible by minimizing expenses and giving yourself time to improve your situation.

Here are 5 Steps to Create and Follow an Emergency Budget through a crisis.

(Look for the ๐Ÿ“ to see scripts on how to apply each step to your unique situation!)

Step 1: Assess Your Current Resources

Gather as many details as you can from your previous budget, bank statements, tracking apps, or whatever you use to manage your money to get an overview of your finances.

๐Ÿ“ We have $________ available in the bank, including savings. We now expect $_________ in monthly income.ย 

Step 2: Determine Your Essential Expenses

Using the same documents, identify which expenses are needs and which are wants. Keep all the basics (e.g., housing, utilities, insurance, groceries, and minimum debt obligations) and remove all the non-essentials.

๐Ÿ“ Our essential expenses are __________________________. We need $________ monthly to cover these basics.

Step 3: Compare New Income with Basic Expenses

At this point, if you feel you will make enough monthly to meet all your basic needs, youโ€™ve finished your budget! If your income doesnโ€™t cover the basics, contact your creditors to negotiate rates or ask for assistance to cut costs.

๐Ÿ“ We have $_________ to spend each month. Since we need $_______ to cover our expenses, we will have enough income to meet our basic needs OR need to cut back on _____________ and/or contact _______________________ for financial assistance.

Step 4: Put the Plan into Action (and Practice Self-Care!)

Set a realistic timeline for how long you plan to follow this budget. Remember: emergency budgets are temporary. Give yourself enough time to stabilize your situation long-term (e.g., find new employment following a job loss).

๐Ÿ“ We plan to follow this budget for _________ months or until _________________________________.

Living in economic survival mode strains your wellbeing, too. Be sure to take care of yourself physically, emotionally, and mentally as best as you can.

๐Ÿ“ย  One way we will take care of ourselves during this emergency is to __________________________________.

Step 5: Gradually Add Savings and Fun Spending to Your Budget

As your situation improves, slowly add savings, goals, and discretionary spending back into your financial plan.

๐Ÿ“Once we make $_________ more than our current income, we will commit to saving $__________ each month into an emergency fund AND reintroduce $___________ in spending per month on ____________________.

Money Management E-Newsletter: May 2020